Selling a house that's currently rented out

gazfocus

I've got a house that we currently rent out to a family member. We've been told by our mortgage lender that they will not renew the consent to let so we need to either sell the house or get a BTL mortgage. We're not in a position to get a BTL mortgage so our only option is to sell the house. 

Our family member that is renting the house is understandably upset and angry that they're going to have to move, so I'm obviously anxious that they will make selling the house difficult which could then cause the mortgage lender to seek repossession.

Just looking for any tips/advice on how to handle this as at the very least we don't want to fall out with our family.

user1977

Mortgage lenders are never keen to repossess (especially if that leaves them with the problem of evicting the resident!). You'd be better to separate things out and get vacant possession before you try to sell.

Sea_Shell

What was the long term plan?

Were they on board with it?

Have you moved the goalposts?


Having mixed business and family, it's going to be hard to undo without upset. ☹️


What's available for them locally to move to?  Can they afford open market rent?

Without viable options, don't be surprised if they dig their heels in and try and stay as long as possible.

gazfocus

user1977 said:

Mortgage lenders are never keen to repossess (especially if that leaves them with the problem of evicting the resident!). You'd be better to separate things out and get vacant possession before you try to sell.

From what the mortgage lender has said on the phone, they won't tolerate anything they deem as 'delay tactics' to try and continue renting the house out without their permission and I don't know whether they'll allow me to just wait for the tenants to move out before I put the house up for sale (the The letter we received from them made it clear that continuing to let the property would be a breach of the mortgage terms and we would be taken to court for them to gain possession. 

From what I've read, it sounds like a huge headache. The tenants would have to attend the court hearing to have a chance at getting an extra 2 months in the house, but even that will cost the tenants money as they'll have to make an application to the court and pay a fee. 

I'm personally really angry with the mortgage lender for putting us in this situation as they're not willing to listen when I've tried to reason with them, so I definitely understand how our family member feels. It's not an ideal situation for any of us.

_Penny_Dreadful

Evict your family member and then market the property. Trying to sell a property with tenants in-situ is never a great idea especially when said tenant is disgruntled. Having the tenant still there will also put a lot of buyers off. 

MattMattMattUK

gazfocus said:

user1977 said:

Mortgage lenders are never keen to repossess (especially if that leaves them with the problem of evicting the resident!). You'd be better to separate things out and get vacant possession before you try to sell.

From what the mortgage lender has said on the phone, they won't tolerate anything they deem as 'delay tactics' to try and continue renting the house out without their permission and I don't know whether they'll allow me to just wait for the tenants to move out before I put the house up for sale (the The letter we received from them made it clear that continuing to let the property would be a breach of the mortgage terms and we would be taken to court for them to gain possession. 

They will not, they will expect you to begin marketing the property and they will take legal action against you and they will expect you to commence eviction proceedings against your tenant. 

gazfocus said:

From what I've read, it sounds like a huge headache. The tenants would have to attend the court hearing to have a chance at getting an extra 2 months in the house, but even that will cost the tenants money as they'll have to make an application to the court and pay a fee. 

It is a headache, as they are family members one would hope that they will not be difficult about it, realising that you have no choice, but regardless you need to begin eviction proceedings against them. What legal contract is in place regarding them renting the property?

gazfocus said:

I'm personally really angry with the mortgage lender for putting us in this situation as they're not willing to listen when I've tried to reason with them

Mortgage lenders normally only grant consent to let as a short term option, they expect that borrowers will make additional provisions whilst the consent is in place, expecting it to be renewed is always risky, you will have had the current consent period to sell the property or obtain a BTL mortgage if that was your long term plan.

gazfocus said:
so I definitely understand how our family member feels.

I doubt anyone expects your family member to be please about the situation, but also, being a family member they should be looking to not make your life any more difficult. You are going to face legal proceedings from your mortgage provider, you will either have to comply or you will lose, this will seriously impact your ability to get a mortgage in the future, so your family member has a choice, be reasonable, or screw you over, one would hope they choose the former.

gazfocus said:
It's not an ideal situation for any of us.

It is not ideal for anyone, but life rarely is, the key is to make the best of where you are now and not make things any worse.

gazfocus

Sea_Shell said:

What was the long term plan?
Long term plan was to rent with 'consent to let' for 3 years until we were in a position to get a BTL mortgage, and rent the house out long term.

Were they on board with it?
They wanted the house to be their permanent home.

Have you moved the goalposts?
Mortgage lender have moved the goalposts. They originally said we could get consent to let for a maximum of 3 years but said we had to renew consent every 12 months. They gave us consent for one year, then refused to renew the consent after the first 12 months.

Having mixed business and family, it's going to be hard to undo without upset. ☹️
Agreed. It's a total mess.

What's available for them locally to move to?  Can they afford open market rent?
I think this is part of the problem. With them being family, we got a valuation from the estate agents, and agreed on a rent 2/3 of the market rent. Now they are looking at what's available and everything's a good £500+ more than they are currently paying.

Without viable options, don't be surprised if they dig their heels in and try and stay as long as possible.
Unfortunately, if that is what they do, we'll have no choice but to go down the Section 21 route so we can comply with the mortgage lenders instruction. There's no way I'm going to risk the house being repossessed. 

I've added my responses above to make it easier to read

MattMattMattUK

gazfocus said:
Mortgage lender have moved the goalposts. They originally said we could get consent to let for a maximum of 3 years but said we had to renew consent every 12 months. They gave us consent for one year, then refused to renew the consent after the first 12 months.

That is not them moving the goalposts, they said a maximum of three years, not guaranteed for three years. 

Sea_Shell

Thanks for that.

If the original plan was a BTL mortgage in 3 years, why can't you do that now? 

What will be different in another 2 years?

gazfocus

MattMattMattUK said:

gazfocus said:
Mortgage lender have moved the goalposts. They originally said we could get consent to let for a maximum of 3 years but said we had to renew consent every 12 months. They gave us consent for one year, then refused to renew the consent after the first 12 months.

That is not them moving the goalposts, they said a maximum of three years, not guaranteed for three years. 

Agree but at the same time, the mortgage lender made it sound as though renewing it every 12 months was a mere formality. Even the page on their website doesn't say anything to suggest otherwise, but yes, it was perhaps naive of me to assume the 3 years was a given.

Sea_Shell said:

Thanks for that.

If the original plan was a BTL mortgage in 3 years, why can't you do that now? 

What will be different in another 2 years?

Main reason is my wife's credit report. She has 2 CCJ's on her report that will fall off in 2 years time. Having spoke to a mortgage advisor on Friday, they think we'll have a difficult time getting a BTL mortgage unless we can stump up around 50% deposit which we can't.

MattMattMattUK

gazfocus said:

MattMattMattUK said:

gazfocus said:
Mortgage lender have moved the goalposts. They originally said we could get consent to let for a maximum of 3 years but said we had to renew consent every 12 months. They gave us consent for one year, then refused to renew the consent after the first 12 months.

That is not them moving the goalposts, they said a maximum of three years, not guaranteed for three years. 

Agree but at the same time, the mortgage lender made it sound as though renewing it every 12 months was a mere formality. Even the page on their website doesn't say anything to suggest otherwise, but yes, it was perhaps naive of me to assume the 3 years was a given.

The three years was never a given, even less so based on the current mortgage market. Also and this is where things could get really sticky as this clause is often included in BTL mortgages and may be in the consent to let, does the consent include a specific provision that the property may not be rented to family members?

gazfocus said:

Sea_Shell said:

Thanks for that.

If the original plan was a BTL mortgage in 3 years, why can't you do that now? 

What will be different in another 2 years?

Main reason is my wife's credit report. She has 2 CCJ's on her report that will fall off in 2 years time. Having spoke to a mortgage advisor on Friday, they think we'll have a difficult time getting a BTL mortgage unless we can stump up around 50% deposit which we can't.

Are the CCJs satisfied and how much equity is in the property as a percentage? There are mortgage advisers on the mortgage board on this site who specialise in those with adverse credit, I am not sure if that extends to BTL but in theory a satisfied CCJ from five years ago should be manageable, though it may depend on lenders current appetite for risk based on their predictions of a drop in property values. Where are you currently living, in a rented property or in another property you own?